Florida has long been a favorite destination for those hoping to escape the harsh winters. However, there are some things that new arrivals to the Sunshine State should be aware of before they arrive. Mainly Florida property insurance rates.
Florida property insurance rates are the highest, devastatingly impacting both the economy and homeowners’ budgets. However, homeowners consider that Florida’s overall reputation has always been a place for relatively low-cost living. In addition, the exorbitant rates are certainly causing many to wonder if they should consider the move.
Lack of Claims Does Not Matter
Florida homeowners have been pretty lucky about the lack of devastating hurricanes in the past couple of years, but this has not stopped a steady increase in Florida property insurance rates. In the last year, state regulators saw rate increase requests climb by nearly 70%, forcing them to look at exactly why these rates are so high.
When determining the cost of insurance rates in Florida, it is essential to understand that there is a wide range of policies covering the state of Florida. In addition, various risks across the state mean that when the averages are determined, carriers combine areas of low crime and weather threats and those with considerably higher threat levels. The result is a somewhat skewed view of the actual property insurance rates in areas not considered high risk.
How Rates are Determined
Companies determine FL property insurance rates from the location of the house. In addition, they evaluate the potential risk of the insurance companies having to pay a claim. Considering the rapid growth of coastal areas, where there is a high possibility of damage from hurricanes, the increasing rates can be astronomical if homebuyers are not careful.
Another reason for the drastic increases in property insurance rates is the potential for flooding in these areas. Furthermore, this is especially risky for low-elevation homes. Insurance companies do not include flood insurance in the typical homeowners’ insurance policy. Therefore, carriers add it as a separate policy. Thus, the risk of flooding leads to an additional increase in insurance premiums. However, companies do not calculate flood insurance premiums into the average rates for the state. Therefore, the current average policy of nearly $2,000 may not be completely accurate.
In the past, homeowners have been more than willing to pay higher property insurance rates in Florida due to the other benefits of having a Florida home. These include the climate, low property taxes, and no income tax. However, the steady increases in property insurance are slowly becoming a burden that some homeowners cannot afford.
If these premiums continue to increase, it could lead to financial disaster for millions of Florida homeowners. In addition, homeowners choose to let their policies lapse due to their inability to pay. Price increases have led insurance companies to absorb some of the cost.